13 N.E.3d 561
Mass.2014Background
- Matthew Ferreira bought a new Jeep from dealer Somerset Auto Group; vehicle was manufactured by Chrysler's predecessor and covered by a limited warranty.
- Ferreira sent a demand letter alleging repeated repairs and sought repurchase, attorney’s fees, and damages under G. L. c. 93A, the Magnuson-Moss Act, and the Massachusetts Lemon Law.
- Somerset asked Chrysler to assume defense and indemnify under G. L. c. 93B, § 8(a); Chrysler refused, calling the demand premature.
- Ferreira sued Chrysler and Somerset; after discovery the trial judge granted summary judgment for Chrysler (finding no expert proof of defect); Ferreira then voluntarily dismissed Somerset.
- Somerset filed cross-claims seeking defense and indemnification under G. L. c. 93B, § 8(a); the judge granted summary judgment to Chrysler on those cross-claims, and the Appeals Court affirmed in part; the Supreme Judicial Court (this opinion) granted further review.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| When does a manufacturer owe a duty to defend under G. L. c. 93B, § 8(a)? | A § 8(a) duty arises whenever a claim alleges a defect in the vehicle (including warranty/breach claims) and the dealer timely notifies the manufacturer. | Chrysler argued § 8(a) is triggered only by claims specifically alleging negligent design or manufacture (and that letters are not claims). | § 8(a) duty to defend is triggered by a dealer’s prompt written notice of an asserted claim that, as alleged, is predicated solely on manufacturer negligence (no dealer fault). |
| Does the duty to defend depend on final adjudication? | Somerset argued it should be reimbursed for defense costs incurred after its demand, even though no liability was ultimately found. | Chrysler argued no reimbursement without a final finding of liability. | Duty to defend is distinct from duty to indemnify and is determined from the allegations; a manufacturer cannot refuse to defend on the theory that indemnity may not be owed later. |
| Does § 8(a) cover product-defect claims framed as warranty (not negligence)? | Somerset argued product-defect/warranty claims fall within § 8(a) even if negligence is not explicitly pleaded. | Chrysler contended § 8(a) requires allegations of negligent design or manufacture. | Claims alleging defects predicated on negligent design or manufacture fall within § 8(a) even if pleaded as warranty/product-liability without explicit negligence language. |
| Who must defend when both dealer and manufacturer are alleged at fault? | Somerset sought Chrysler’s defense despite complaint alleging fault by both parties. | Chrysler argued no duty to defend where allegations implicate both dealer and manufacturer. | No duty to defend under § 8(a) when the claim alleges fault by both the manufacturer and the dealer; neither party must assume the other’s defense in that circumstance. |
Key Cases Cited
- Beard Motors, Inc. v. Toyota Motor Distribs., 395 Mass. 428 (1985) (legislature enacted G. L. c. 93B to protect dealers from manufacturers’ unequal bargaining power)
- Metropolitan Prop. & Cas. Ins. Co. v. Morrison, 460 Mass. 352 (2011) (duty to defend is distinct from duty to indemnify; defense is determined from pleadings)
- Billings v. Commerce Ins. Co., 458 Mass. 194 (2010) (insurer has duty to defend when complaint’s allegations are reasonably susceptible of a covered claim)
- Fireside Motors, Inc. v. Nissan Motor Corp., 395 Mass. 366 (1985) (retailer may seek indemnity from manufacturer where retailer is blameless but held derivatively liable for manufacturer’s defective product)
- Elias v. Unisys Corp., 410 Mass. 479 (1991) (common-law indemnity allows a blameless party to recover defense costs from the wrongdoer)
- Colter v. Barber Greene Co., 403 Mass. 50 (1988) (plaintiff may recover on implied warranty without proving manufacturer negligence)
- Evans v. Lorillard Tobacco Co., 465 Mass. 411 (2013) (product liability may be based on manufacturing, design, or warning defects)